Inhouse Versus Outsourced R&D Activity for Technology Firms - Essay Example

The Pros & Cons of In-House Versus Outsourced R&D (Research & Development) Activity for Technology Firms Contents Contents 2 Introduction 3 A.Why outsourcing? 4 B.What should not be outsourced? 6 References/Bibliography 9 Introduction Outsourcing vendors like India, China, Philippines and other emerging economies have arose as a favorable destination for outsourcing business processes with regard to its strong financial markets and rich human capital. They are emerging as a service hub for many multinationals around the globe and outsourcing constitutes of 35% of its national income, thereby increasing employability and growth of the economy on the whole. The business confidence and excellent communication skills have filled the gaps and facilitated enough trust to last for centuries, but security of data is often an unanswered question. The first section takes into account the various purposes and definitions of outsourcing as an activity. The primary reasons are explored in detail as to its evolution and factors influencing its security impacts on businesses. The next section outlines the various security issues that may arise in the outsourcing business and its various implications to the business and customer confidence. The primary focus is on secure outsourcing which acts to the safety of businesses and retains the faith and confidence in their services. It acts as a great tool to foster harmonies relationships and ensure business continuity for gaining competitive advantage. The need for state-of-the-art IT solutions worked out and innovations implemented with small losses, outsourcing may be the only way out. It will save from the nightmare of retraining employees (or even hiring new ones) and/or paying for re-equipment (Kenneth, 2007). A. Why outsourcing? Information strategy for any organization is purely based on their requirements to manage business and envelope operations into a system which would in turn effectively manage their resources and yield not only profits in the long run but satisfaction to its employees and customers (Laudon, 2002). The success of the IT strategy would be among the employees or users of the system as they are the people who live with the technology for getting the job done. Rich human capital: Outsourced software vendors produce ‘A’ level business and technological graduates from its most prestigious institutes like Institutes of Management and Institute of Technology. They possess extremely high talent in terms of fundamental knowledge and high level of skills due to their immense strength of aptitude and quantitative ability. The human capital has capability to take up entrepreneurship and make a difference to their economy (Checkland, 2003). Cost efficiency: In Outsourced software vendors, the costs of living and spending habits are quite less and thus the monetary policies are favorable for development at low costs. It makes it favorable for companies to outsource their jobs to India and thus benefitting in the process and often that results in long term profits. Quality of Indian Companies: Outsourced software vendor companies are quite resource capable in fetching the right expertise to perfect a job and offer enough support for retaining the customer. They meet the ISO, SEI CMM compliances and meet international standards for performance and task audit (Beynon, 2002). Better communication facilities: The communication technologies like mobile technologies are quite researched and have capacitated the use in business and critical regions where any flag of disadvantage would shake business confidence and tension service level contracts. Such innovation has boosted Outsourced software vendors business confidence in the international market and has built confidence to outsource jobs which are handled with enough care and trust. Government support: The service sector of Outsourced software vendors is growing at the rate of 40-45% and contributes largely towards the economy. The government is taking an initiative to retain the outsourcing and often allows benefits and subsidies for further encouragement and growth. English speaking country: Outsourced software vendors speak the international language and are quite proficient in it. The basic education is in English and people possess enough competencies to master the language and communicate effectively with international clients for fetching more of a relation than targeting the job first that builds a long term relationship with the client for trust. Domain knowledge: The domain expertise is possessed at large as the education system promotes large scale benefits towards making every pass out a genuine and quality deliverable. The training centers makes sure that all the various knowledge transition centers identify and manage effectively the process to get one equipped with the latest business functions and deliverables (Hoffer, 2006). B. What should not be outsourced? Management controls Source The crucial control of a business is never to be outsourced which poses a large threat to their operation and management. The performance of the business would be to acknowledge the decision making of the higher management and this portion forms the primary focus for business foundation. Broken systems – Fix it before outsourcing Unless the equipment is fixed, the outsourced vendor would require integrating the software for its repair and enough maintenance plans cannot be devised accordingly. The various business rules and processes can be fixed in accordance to that (Checkland, 2001). Strategic Planning – Involve staff for their buy-in into the plan Involving staff would ensure a better preserve of morale and would influence their confidence and willingness to work. Massive changes , Customer relationship management If the software demands a large scale change which would require devising a plan for framing the customer relations appropriately, it is not safe to outsource. The safety here would relate to the handling the customer relations which would be scarred during the massive shift of operations to an outsourced vendor (Checkland, 2001) Critical systems and process that need to be kept confidential This is a situation where the security of the business logic of an organization cannot be outsourced due to strategic problems. In such situations, the business principals are core to their existence and any illicit penetration into it would hamper their performance and raise a sense of distrust for its customers. Regulatory and compliance management The principal organization may be legally bounded by the economy rules, labor policies, trade licenses and state authorities to function within the economy and not to ship business process management to other countries. All such compliance and regulatory management which are duly approved by the state government cannot be outsourced. IT Management support The information technology management support is very crucial in decision making for the business processes to impact performance and growth. Such support services should not be outsourced for any fundamental reasons (James, 2003). References/Bibliography Beynon, Davies, P (2002). An Introduction to informatics in Organizations: Palgrave MacMillan. Curtis, G. and Cobham (2005). Business Information Systems. 5th ed. London: Financial Times/Prentice Hall. Chaffey, D., & Wood, S. (2005). Business Information Management, Improving Performance Using Information Systems, London: Financial Times/Prentice Hall. Checkland, P. (2001). Systems Thinking, Systems Practice, 2nd ed. London: Financial Times/Prentice Hall. Checkland, P (2003). Systems Thinking, Systems Practice, Chichester: John Wiley & Sons Ltd. Hoffer, A. Jeffrey (2006). Modern Systems Analysis and Design. Pearson Education. James, A. O’Brien (2003). Management Information System, 6th Ed Tata Mc Graw Hill. Kenneth, C. Laudon and Jane, P. Laudon (2007). Management Information System, 6th Ed New York: Tata Mc Graw Hill. Read More